South Africa’s trade minister Parks Tau is appealing a tribunal decision blocking Vodacom’s R13.2 billion acquisition of a stake in fibre operator Maziv, arguing the merger is vital for digital infrastructure investment. Vodacom plans to spend R10 billion on fibre rollout and create 10,000 jobs. Industry players, including MTN, support the deal, citing the need for consolidation to drive growth. The appeal signals months of uncertainty as deal terms are renegotiated.
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By Loni Prinsloo
South Africa’s minister of trade, industry and competition is appealing an order by the nation’s Competition Tribunal that blocked Vodacom Group Ltd.’s 13.2 billion-rand ($730 million) deal to buy a stake in Remgro Ltd.’s fiber businesses.
Parks Tau, whose ministry also oversees the competition regulators in the country, is seeking to overturn the decision and allow the merger to proceed, according to the appeal document seen by Bloomberg News.
This rare move by the newly appointed minister is a blow to South Africa’s antitrust regulators, who blocked the acquisition in a shock decision in October. The parties involved in the deal have argued that significant investment is needed in South Africa, especially for digital infrastructure in lower income areas.
“The South African government backing for Vodacom’s acquisition of a stake in fiber operator Maziv, could add to pressure on the Competition Appeals Court to approve the deal,” Bloomberg Intelligence analyst John Davies said. “Still, a final decision may be many months away and deal terms are being renegotiated, which is reasonable, given it was announced three years ago.”
A large number of parties have been called to respond to the appeal, including Vodacom’s biggest cross-town rival MTN Group Ltd. The industry is largely supportive of the deal, as there is an agreement that consolidation is needed for future growth prospects.
As part of Vodacom’s deal, the plan is to invest in fiber rollout in low-income areas, spending 10 billion rand and providing 10,000 jobs, the company said previously.
“We support the appeal as consolidation is needed in South Africa to support accelerated investment in digital infrastructure and services,” MTN CEO Ralph Mupita said in response to questions. “South Africa is lagging this important global trend at a time technology is accelerating and transforming societies.”
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